Extract
[...] And the last mission of the state, according to neoclassicals, lies in maintaining competition. When competition is possible, the state ensures its maintenance and intervenes to prevent abusive behavior by enterprises. Opening up to competition is very important because when it is possible, competition in markets always leads to an optimal allocation of resources, this is explained by the price, in pure and perfect competition, corresponds to the equilibrium price, determined by the market and fluctuating according to supply and demand. [...]
[...] When the market is made up of a small number of companies, it facilitates the probability of agreement between them. Market powers lead to the creation of cartels Then, to form a cartel, companies must be able to coordinate their activity and this requires being in a small number. They then enter into agreements that allow them to reduce competition, which enables them to agree on a price that allows them to realize significantly higher profits than competitive profits. A well-known example concerns that of the telecommunications market in the 2000s. [...]
[...] It was created in 1960, it was created at the initiative of Iran and Venezuela, in a context of exacerbation of competition between oil companies and strong downward pressure on the price of a barrel. Today, twelve countries are members of OPEC. Through this cartel, member countries seek to regulate production and the price of a barrel of oil. They act sometimes on quantities, sometimes on prices. When acting on prices, this is translated by the implementation of production quotas. By reducing supply, the cartel thus maintains a bullish pressure on prices. [...]
[...] The second category of monopoly is formed when we are in a market with legal barriers to entry. We speak of institutional or legal monopoly because the State, as legislator and executive power, grants opening authorizations. Various activities are concerned by the institutional monopoly, activities such as taxi journeys, notary legal services, supermarkets or mobile telephone networks. The innovation monopoly creates barriers to entry in the affected markets Finally, the third category of monopoly includes those that are derived from innovation. Here, it is knowledge and technology that allow the company to benefit from a monopoly. [...]
[...] Thus, for example, in the telecommunications sector, the reduction of the cost of fiber optics has allowed the introduction of new competitors, each with their own main fiber optic network interconnected to Orange's network for local coverage (the last kilometer), whose duplication would be economically inefficient. Thus, in reality, the model of pure and perfect competition is almost never met, since its basic conditions are rarely met. In fact, imperfect competition reigns in practice, and in some cases, competition is even absent (case of the monopoly). II/ The market power arising from the monopoly In the previous section, we presented the sources of market power, among which the monopoly is a central element. [...]
